Companies weigh in on 'State of Manufacturing' in Pacific Northwest

Struggles to find skilled workers and worries over the impact of tariffs aren't enough to tarnish the largely positive outlook of companies involved in manufacturing in Oregon and Washington.

More than 80 percent of the 100 companies that participated in a recent "State of the Manufacturing" survey said they consider the overall business climate in the Pacific Northwest to be good to excellent.

This the first year that Aldrich CPAs + Advisors and the law firm of Schwabe, Williamson & Wyatt spearheaded the industry survey, the results of which were presented during a symposium held Sept. 28 in downtown Portland.

Companies in this year's survey ranged in size from large-scale manufacturers to smaller enterprises, with one-third of respondents from companies with 50 or fewer employees and revenues under $10 million. Eighty percent of companies involved were based in Oregon; the remainder were in Washington.

Seventy-six percent of the companies involved in the survey have been in business for more than 20 years. The majority of the people providing input for their companies were upper-level, or C-suite, management.

In addition to seeing the overall business climate in Pacific Northwest as headed in a positive direction, nine out of 10 respondents said they see the business outlook as positive for their specific companies.

However, the majority of companies also identified workforce issues as an area that could threaten continued success for both companies and the overall state of manufacturing in Oregon and Washington.

The top challenge identified by the majority of the survey respondents was related to improving and expanding workforces. The challenge has been a consistent issue for companies, both locally and nationally, for the past several years, according to Jennifer Campbell, industry group leader at Schwabe.

"It's an ongoing struggle and it's not going away," she said.

With nearly one-quarter of the manufacturing workforce expected to retire in the next 10 years, companies are casting an eye toward finding replacements. But the industry has factors working against it that

recruitment and hiring efforts difficult. Low unemployment rates and low enrollment in science, technology, engineering and math classes and STEM-focused programs at the high-school level make finding workers with the right skills difficult. The industry also is combating a belief by millennials that manufacturing doesn't pay high wages.

About a quarter of survey respondents cited a lack of affordable housing as an additional hurdle to being able to recruit workers.

More than 80 percent of the respondents said they've already taken steps in-house to start to address the labor shortage, from hiring temporary workers to fill gaps to increasing wages. Many respondents said they're working with community colleges to find new employees.

Other approaches being considered but not yet implemented are more externally focused, including creating apprenticeship programs, working with headhunters and tapping people coming out of the military.

"When (employers) are taking care of what (they) can at home, then (they're) going external," Campbell said.

Rounding out top concerns of respondents were uncertainty caused by federal tariffs and worries about companies being adequately prepared for future leadership transitions.

While Oregon and Washington companies were in alignment in most areas of the survey, there were a few discrepancies. The largest break, for example, was in the area of state policies related to businesses. While one-third of companies from Washington said they considered their state's policies as anti-business, two thirds of Oregon participants said the tax policies coming out of Salem were unfriendly toward businesses in manufacturing.

In addition, while the majority of respondents said they approved of the federal tax bill passed by Congress last, small businesses with 50 or fewer employees were more likely in the survey to voice opposition to the tax bill.

The online survey was conducted by DHM Research from May 14 through June 25. Manufacturing companies were invited to participate by Schwabe, Aldrich, and manufacturing industry organizations. Ads targeting upper-level management in manufacturing also were placed on LinkedIn.

The largest single manufacturing industry was food and beverage with 20 percent participation, followed by metal fabrication and aerospace, with 11 percent and 9 percent participation. Machinery accounted for 8 percent and wood products for 6 percent. Electronics, high tech, medical and outdoor gear all accounted for 4 percent of responses. All other manufacturing industries accounted for 30 percent of responses.

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